The Importance of Franchise Partnerships in the Electronic Components Supply Chain

Through franchise partnerships, electronic components distributors can offer various benefits to ensure the smooth flow of parts from production lines to end-users

The global electronic components supply chain is a vast and intricate web, hallmarked by the complexities of the semiconductor manufacturing process. It can also be very fragile, vulnerable to sudden shifts in market demand or geopolitical instability. This can threaten the availability of electronic components or, worse, allow suspect counterfeit parts to slip in through gaps.

Electronic component distributors help original equipment manufacturers (OEMs), contract manufacturers (CMs), and electronic manufacturing service (EMS) providers navigate the challenges of the global supply chain through their expansive network of partners and sales experts. One element electronic component distributors possess that OEMs, CMs, and EMS providers might not enjoy to the same extent is franchise partnerships.  

Through franchise partnerships, electronic components distributors can offer various benefits to ensure the smooth flow of parts from production lines to end-users. Distributors also promise their customers reliability, efficiency, and innovation.  

Quality and Authenticity of Parts

One of the biggest threats to buyers in the electronic components industry is counterfeit or substandard parts. In 2022, the Electronics Reseller Association International (ERAI) reported that counterfeit components circulating the market showed a 35% year-on-year increase over 2021. The U.S. Chamber of Commerce estimates counterfeit components cost up to $500 billion across industries globally.  

Beyond cost, counterfeits can pose a significant threat to human life depending on which industry they infiltrate. It is suspected that the death of an Air Force pilot in June 2020 was the result of up to possibly ten faulty transistors and semiconductors causing a failure in a jet’s ejection seat. Counterfeits within high-reliability industries, such as aerospace and defense, are a well-documented problem with notable occurrences in 2011 and 2012.  

During electronic component supply chain disruptions, such as the 2020-2022 global semiconductor shortage, counterfeiters can easily take advantage of desperate OEMs, CMs, and EMS providers. However, counterfeiters are not limited to supply chain disruptions to take advantage of manufacturers. They can even slip into the electronic supply chain during stable periods due to the lack of overall visibility.

According to McKinsey, only 45% of organizations can see as far as their first-tier suppliers, lacking both upstream and downstream visibility. With this lack of visibility, even compromised raw materials can infiltrate component production lines without detection.

Electronic components distributors with franchised partnerships can illuminate these dark areas by providing reputability and utilizing robust quality management systems (QMS). With franchise partners, components' authenticity and quality are often guaranteed as these suppliers utilize credible manufacturers. For example, Nvidia utilizes TSMC to produce its coveted graphics processing units (GPUs).  

Furthermore, if counterfeit materials could slip in, which is rare if not impossible, electronic components distributors, such as Sourceability, have thorough QMS standards through which all parts are tested before being delivered to the final buyer, this ensures the quality and authenticity of components.

This assurance is invaluable, especially in sectors where reliability is paramount, such as aerospace and defense, automotive, and medical electronics.

Streamlined Procurement Process

The electronic components supply chain is complicated. Manufacturing a single semiconductor can take up to 500 steps, depending on the type. The procurement process can be similarly elaborate, with franchised, authorized, independent, hybrid, and third-party suppliers, among others, compromising a fraction of the vast supply chain. This can make procurement challenging, especially when buyers must compare numerous part offers from suppliers on lead time, price, and reputability.  

Electronic component distributors with franchise partners can leverage their extensive networks and expertise to help reduce lead times, ensure timely delivery, and even optimize costs on popular components. With these partners, distributors have the agility to meet buyers’ demands in the ever-changing market and help procurement teams mitigate supply chain disruptions, such as component shortages or geopolitical instability, that impact component availability.  

This streamlined process helps simplify multi-step procurement tasks, reducing time and risk. It allows professional buyers to schedule deliveries and focus on other tasks quickly.

Access to Cutting-Edge Technology and Technical Expertise

With the popularity of artificial intelligence (AI), innovation within the electronic components industry is moving rapidly. Unfortunately, for many small to mid-sized OEMs, CMs, and EMS providers, that often means waiting months to get their hands on new advanced semiconductors or emerging components as industry giants often get first dibs.  

Electronic components distributors that have franchise partners can secure inventory for their customers. This means that a small OEM can get their hands on the latest Nvidia GPUs by working with a distributor franchised with Nvidia. This can empower customers to stay ahead of the market as others struggle to secure their supply of highly coveted parts.  

Likewise, the complexities of the electronic components landscape require more than just access to products; they demand technical expertise and comprehensive support. Franchise partnerships enable authorized distributors to provide value-added services, including design assistance, engineering support, and supply chain consultancy. This hands-on guidance ensures that customers select the right components for their applications, optimize their designs for performance and cost-efficiency, and overcome challenges.

For example, as a franchised partner of Nvidia, Sourceability’s experts can help design engineers learn how to best optimize Nvidia’s flagship components in new and upcoming products. This can put OEMs, CMs, and EMS providers leagues ahead of their competition and take advantage of emerging market trends as consumer demand grows.  

Sourceability’s Franchised Lines

Some electronic component distributors offer franchise partnerships as indispensable assets. These partnerships can provide a solid foundation for success in an increasingly competitive and complex industry. These alliances drive innovation, efficiency, and reliability throughout the electronic components industry by ensuring quality and authenticity, streamlining the supply chain, and facilitating access to new technologies and technical expertise.

Sourceability continues to add new suppliers to its franchise lines to support the growing needs of OEMs, CMs, and EMS providers as artificial intelligence and new technologies become popular. Sourceability works closely with its suppliers to provide access to top-tier franchise lines to manufacturers of all sizes, fostering long-lasting relationships between companies to ensure resilience in the face of supply chain disruptions.  

To learn more about our franchise partners, Sourceability’s line card is available for download and provides a comprehensive list of products and brands our suppliers represent and sell. For professional buyers who are eager to begin sourcing hard-to-find components, our global team of sales representatives is ready for your RFQ submission here.  

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